Pension contributions and tax arrangements

access to finance

The NHS Pension Scheme is financed by payments from the employer and current members who pay contributions at different tiers depending on their pay.

Employer contributions
Member contributions
Tax arrangements.

Employer contributions and administration levy

The employer contribution rate for the period 1 April 2019 to 31 March 2023 is 20.6 per cent of pensionable pay for both the 1995-2008 Scheme and the 2015 Scheme. 

The employer contribution rate is set through a process known as the scheme valuation. A scheme valuation is carried out every four years and it measures the full cost of paying pension benefits (to current pensioners). The most recent 2016 scheme valuation identified the need to increase the employer contribution from 14.3 per cent to 20.6 per cent from 1 April 2019The final valuation results will be published shortly. 

Employers are required to pay a scheme administration levy in addition to the employer contribution rate, to cover the cost of the scheme administration. This levy is 0.8 per cent of pensionable pay and will be collected at the same time and in the same way as normal employer contributions. In practical terms, this means employers will pay 20.68 per cent of pensionable pay. 

Member contributions

Tier  Pensionable Pay (whole-time equivalent) Contribution Rate from
2015/16 to 2021/22
1  Up to £15,431.99  5.0 per cent
2  £15,432.00 to £21,477.99 5.6 per cent
  £21,478.00 to £26,823.99 7.1per cent
4  £26,824.00 to £47,845.99 9.3 per cent
5  £47,846.00 to £70,630.99 12.5 per cent
 £70,631.00 to £111,376.99 13.5 per cent
 £111,377.00 and over 14.5 per cent

Tax arrangements

NHS Pension Scheme members will receive tax relief on their pension contributions up to a certain amount. This is because contributions are taken from pay before tax is taken off, therefore contributions reduce the amount of pay subject to tax.

The tax relief available for pension savings is subject to certain limits known as the annual and lifetime allowances, these are restrictions put in place by HMRC. You can find out more about these allowances on our annual and lifetime allowances web page.

Latest Tweets

Latest Blog Post

Being the employer of choice - reward in integrated care systems

04 / 6 / 2019 2.32pm

NHS Employers' Max Liversuch looks at reward in integrated care systems, and the importance of being the employer of choice.

Why Register?

Great reasons to register with NHS Employers

  • A personalised website
    Manage your profile and select topics of interest to you
  • Access your dashboard
    Bookmark useful content to help you quickly find what you're looking for
  • Get involved
    Contribute to our Talking Points discussions, comment on and rate our webpages
  • Keep up to date
    Receive the latest newsletters and media summaries

Log In